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# Amtown s public schools are supported primarily by town

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Amtown s public schools are supported primarily by town [#permalink]

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28 Apr 2012, 22:41
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Amtown’s public schools are supported primarily by town property taxes. The town plans to eliminate the property tax and support schools with a new four-percent sales tax on all retail items sold in town. Four percent of current retail sales is substantially less than the amount currently collected through property taxes, but town planners believe that adopting this plan will not have a negative impact on the funds available for the town’s public schools because ______.

Which of the following most logically completes the argument?

A) a new shopping center that will draw shoppers from neighboring towns will open this year in Amtown
b) many Amtown residents are planning to leave town due to high property taxes
c) a number of parents who currently send their children to Amtown’s public schools do not pay property taxes.
d) the sales tax in neighboring towns is much higher than four percent
e) Amtown was recently featured in a magazine as one of the top 10 weekend getaways from a nearby city.

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30 Apr 2012, 00:43
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Yes, I go with option 'A'.
'B' can be eliminated because, effect on property tax is irrelevant as we are weighing the option of sales tax.
'C' can be eliminated as the number of parents from whom property tax is not being collected does not matter here because we are weighing the option of sales tax.
'D' can be eliminated because, sales tax of other towns is irrelevant.
'E' seems a bit irrelevant and not an increase in sales tax hinted.
Option 'A' seems better, as the new shopping centre may enhance sales tax which may compensate the gap that is expected from adoption of new plan.
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30 Apr 2012, 11:14
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We need an answer choice that explains how the 4% retail tax will be able to generate enough revenue to match the revenue generate from the previous property tax.

(A) provides such an explanation: a new mall, bringing customers from other cities, will lead to more people buying products. Customers will have to pay 4% retail tax and thus enough revenue will be generated so that revenues from sales tax will be at least as high as those from the erstwhile property tax. CORRECT

(B) Fewer residents means fewer people being charged the 4% and presumably less revenue coming from the retail tax. INCORRECT

(C) Does not relate to retail tax.

(D) The neighboring town is irrelevant.

(E) In of itself a Top 10 billing in a magazine does not mean that Amtown can expect a massive influx of money spent on retail. At least nowhere as much as Amtown can expect a surge in revenues from a retail sales, the way it can with the opening of the mall in (A).

Hope that helps .
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Amtown s public schools are supported primarily by town [#permalink]

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06 Mar 2013, 14:22
Amtown’s public schools are supported primarily by town property taxes. The town plans to eliminate the property tax and support schools with a new four-percent sales tax on all retail items sold in town. Four percent of current retail sales is substantially less than the amount currently collected through property taxes, but town planners believe that adopting this plan will not have a negative impact on the funds available for the town’s public schools because ______.

Which of the following most logically completes the argument?
(A)a new shopping center that will draw shoppers from neighboring towns will open this year in Amtown
(B)many Amtown residents are planning to leave town due to high property taxes
(C)a number of parents who currently send their children to Amtown’s public schools do not pay property taxes.
(D)the sales tax in neighboring towns is much higher than four percent
(E)Amtown was recently featured in a magazine as one of the top 10 weekend getaways from a nearby city.

Need detail explanation..............
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Re: Amtown s public schools are supported primarily by town [#permalink]

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23 Mar 2013, 10:46
mun23 wrote:
Amtown’s public schools are supported primarily by town property taxes. The town plans to eliminate the property tax and support schools with a new four-percent sales tax on all retail items sold in town. Four percent of current retail sales is substantially less than the amount currently collected through property taxes, but town planners believe that adopting this plan will not have a negative impact on the funds available for the town’s public schools because ______.

Which of the following most logically completes the argument?
(A)a new shopping center that will draw shoppers from neighboring towns will open this year in Amtown
(B)many Amtown residents are planning to leave town due to high property taxes
(C)a number of parents who currently send their children to Amtown’s public schools do not pay property taxes.
(D)the sales tax in neighboring towns is much higher than four percent
(E)Amtown was recently featured in a magazine as one of the top 10 weekend getaways from a nearby city.

Need detail explanation..............

Four percent of current retail sales is substantially less than the amount currently collected through property taxes, but town planners believe that adopting this plan will not have a negative impact on the funds available for the town’s public schools because

We need to focus on money collection.
We need to make sure that there is no impact due to change in tax behavior. Amount of money from both should be same to avoid any negative effect.
If the retails sales are expected to increase due to some reason this will offset the lower amount collection.
This is what A says. Neighboring shoppers means extra sales and hence extra budget for schools.
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Re: Amtown s public schools are supported primarily by town [#permalink]

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23 Mar 2013, 12:53
mun23 wrote:
Amtown’s public schools are supported primarily by town property taxes. The town plans to eliminate the property tax and support schools with a new four-percent sales tax on all retail items sold in town. Four percent of current retail sales is substantially less than the amount currently collected through property taxes, but town planners believe that adopting this plan will not have a negative impact on the funds available for the town’s public schools because ______.

Which of the following most logically completes the argument?
(A)a new shopping center that will draw shoppers from neighboring towns will open this year in Amtown
(B)many Amtown residents are planning to leave town due to high property taxes
(C)a number of parents who currently send their children to Amtown’s public schools do not pay property taxes.
(D)the sales tax in neighboring towns is much higher than four percent
(E)Amtown was recently featured in a magazine as one of the top 10 weekend getaways from a nearby city.

Need detail explanation..............

Hi Mun23
The question is on lower side.....
Lets focus on the conclusion:-
Though the sales tax revenue amounts to a lesser value than the revenue collected from property tax, planners are confident that the sales tax amount will see a rise.
It is not mentioned why will that rise be? we have to find, that reason......So one probable and quickest way to think is that people who previously did not paid the tax will now pay the tax because they want the school not to run out of funds.....or something that support the idea that newer shops will be set up and these shops will help increase the tax base....

With that in mind attack the answer choices:
A. So brings in new idea that help increase the sales tax. probable answer...
B. Weakener...If the residents leave the town their tax base will decline.
C. Does not present any solution, just presents fact.
D. What we will do by knowing other town's tax rate.
E. If its featured as top 10 weekend getaways...how is it going to change the present condition...this is already present.....Yes if it presented that due to some reasons...the city is going to encounter more customers during weekend, than it could have been considered......

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Re: Amtown s public schools are supported primarily by town [#permalink]

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22 Apr 2013, 21:08
All duplicate threads on this topic have been merged.

Please check and follow the Guidelines for Posting in Verbal GMAT forum before posting anything.
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Re: Amtown s public schools are supported primarily by town [#permalink]

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06 Oct 2013, 22:55
I presume the flow of argument is different than that stated by previous posters.

this plan will not have a negative impact on the funds available for the town’s public schools
because ______

The structure implies that although AMOUNT collected through SALES TAX is less than that collected through PROPERTY TAX, this plan will not have a negative impact on the funds available for the town’s public schools because ______

IMHO, I think what is needed in the blank is how the PROPERTY TAX is expected to have negative impact that SALES TAX won't have.

(B). Says "many Amtown residents are planning to leave town due to high property taxes".

Lower property taxes => Lower collection => NEGATIVE IMPACT which SALES TAX won't have as per the stimulus.

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11 Jan 2014, 22:50
Hi,

Thank you for your explanation but I just couldn't understand this part: "Customers will have to pay 4% retail tax and thus enough revenue will be generated ..." - how do we know it'll be enough/good enough?

Instead I thought B was right because residents were leaving town because of high property taxes, so, if taxes continued, the total amount would anyways reduce but if taxes are removed, people would want to stay back because the only reason they were leaving the town was the property taxes.
B: many Amtown residents are planning to leave town due to high property taxes

ChrisLele wrote:
We need an answer choice that explains how the 4% retail tax will be able to generate enough revenue to match the revenue generate from the previous property tax.

(A) provides such an explanation: a new mall, bringing customers from other cities, will lead to more people buying products. Customers will have to pay 4% retail tax and thus enough revenue will be generated so that revenues from sales tax will be at least as high as those from the erstwhile property tax. CORRECT

(B) Fewer residents means fewer people being charged the 4% and presumably less revenue coming from the retail tax. INCORRECT

(C) Does not relate to retail tax.

(D) The neighboring town is irrelevant.

(E) In of itself a Top 10 billing in a magazine does not mean that Amtown can expect a massive influx of money spent on retail. At least nowhere as much as Amtown can expect a surge in revenues from a retail sales, the way it can with the opening of the mall in (A).

Hope that helps .
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Re: Amtown s public schools are supported primarily by town [#permalink]

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12 Jan 2014, 00:40
Amtown’s public schools are supported primarily by town property taxes. The town plans to eliminate the property tax and support schools with a new four-percent sales tax on all retail items sold in town. Four percent of current retail sales is substantially less than the amount currently collected through property taxes, but town planners believe that adopting this plan will not have a negative impact on the funds available for the town’s public schools because ______.

Which of the following most logically completes the argument? WE HAVE TO INCREASE RETAIL SALES SUCH THAT 4 % OF RETAIL SALES COLLECTED AS SALES TAX EXCEEDS THE PROPERTY TAXES, IN FUTURE

A) a new shopping center that will draw shoppers from neighboring towns will open this year in Amtown...WILL INCREASE AMOUNT COLLECTED THROUGH SALES TAX.....CORRECT
b) many Amtown residents are planning to leave town due to high property taxes.....WHY ARE THEY PLANNING TO LEAVE SINCE PROPERTY TAXES ARE BEING ELIMINATED...LET THEM...MORE OVER EVEN IF THEY WERE TO LEAVE AND PROPERTY TAXES WERE TO CONTINUE...SOMEBODY ELSE WOULD HAVE PAID THE SAME.....IRRELEVANT
c) a number of parents who currently send their children to Amtown’s public schools do not pay property taxes....IRRELEVANT.
d) the sales tax in neighboring towns is much higher than four percent......WHAT NEIGHBORING TOWN DOES IS IRRELEVANT
e) Amtown was recently featured in a magazine as one of the top 10 weekend getaways from a nearby city.....THIS WAS A THING OF THE PAST....EVEN WITH THIS, THE Four percent of current retail sales was substantially less than the amount currently collected through property taxes... WE HAVE TO LOOK FOR WHAT IS IN STORE IN FUTURE THAT WILL ENHANCE COLLECTION THROUGH SALES TAX ... INCORRECT
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Re: Amtown s public schools are supported primarily by town [#permalink]

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27 Apr 2015, 19:13
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Re: Amtown s public schools are supported primarily by town [#permalink]

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07 Feb 2017, 01:53
The argument describes a sales tax plan that is expected to bring in the same amount of money as the current property tax, despite the fact that current sales tax revenues are lower than current property tax revenues. The correct answer will include information that will involve the sales tax bringing in more money than is presently the case.
(A) CORRECT. If a new shopping center is opening in Amtown, the retail sales in the town, and the receipts from the sales tax, would be expected to rise. This would potentially enable the sales tax to generate at least as much money as the
current property tax.
(B) The fact that some residents might leave Amtown is irrelevant, as this may not necessarily have an impact on property tax or sales tax receipts, particularly if the plan is adopted and the residents change their minds. Additionally, the argument states that the sales tax will not have a negative impact on the funds available for the town’s public schools.
(C) The fact that some parents do not pay property taxes is irrelevant to the sales tax plan generating as much money for the public schools as the current property tax.
(D) Higher taxes in surrounding areas might encourage individuals to shop at Amtown. However, this phenomenon would already be factored into current sales tax receipts, which are less than the current property tax.
(E) It could be argued that this magazine profile would increase immediate tourism in Amtown, and thus sales tax receipts. However, any economic impact would depend upon a direct link between the magazine article, increased visitors, and money spent by those visitors, all of which must be assumed. Additionally, a magazine article is unlikely to have a sustainable effect over a long period of
time, which is necessary for the sales tax to provide funds equivalent to those provided by the current property tax.
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Re: Amtown s public schools are supported primarily by town   [#permalink] 07 Feb 2017, 01:53
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